Improving McGill University's Salary Structure for Competitiveness
McGill University's management forum presentation highlights the importance of aligning Human Resource practices with best practices. The current salary structure lacks flexibility and clear market references for competitiveness. A benchmark exercise reveals that while lower grade levels are competitive, higher grades are less so. The way forward involves implementing best practices to enhance the university's salary structure and attract key talent.
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Presentation Transcript
Management Forum Presentation November 3, 2008 Lynne Gervais, Associate Vice-Principal Human Resources 1
M group vital to McGills operations, key player in growth and development of McGill as a World Class Institution Desire to align Human Resource practices with Best Practices . Commitment made to management and professional staff in December 2007 to review the current M Compensation framework 2
Current M salary structure not systematically benchmarked since the implementation of the Pay Equity Program in 2002 Current structure lacks flexibility to adapt to market conditions for attraction and retention of key talent Pay scales are narrow; salary progression is slow and a promotion is needed in order to obtain a significant salary increase Does not allow for sufficient recognition of individual contribution No clear market reference point to validate competitiveness 3
Current Benchmark Excercise Two (2) consulting companies were selected to conduct this benchmarking exercise: Normandin-Beaudry : Mercer, Watson Wyatt, Hewitt The Hay Group Role Profiles Surveyed Market Reference Type of Survey 1. SAF (4 role profiles) G13 Universities + Concordia University + 4 main English CEGEPS (Dawson, Vanier, John Abbott, Champlain) Closed 2. All other job families (17 role profiles) All industries + Not for profit Standard published surveys- Greater Montreal data, National data- Non profit, National data all industries LOG, FIN, PER, COM, ADM, IST 4
Levels 1 & 2 (grades 5 & below) McGill s salaries are overall competitive Levels 3 & 4 (grades 6 & above) McGill s salaries are generally less competitive SAF positions: The maxima of McGill s current salary scale is in line with the median salary of our reference market ; Actual salaries are on average 5% lower than market median Note: This study was conducted only on base salaries, and does not take into account the other components of the total rewards (benefits, holidays, etc.) offering of the University 5
Best Practices :Salary Benchmarks Current Practice Going Forward Private Industry data in addition to Public and Para Public Para Public & Public Sectors primarily Yet we recruit from a range of sectors including Private Industry Local Markets- Montreal Yet we occasionally recruit within the Province and other provinces in Canada Based on Local & National reference Market Focus on external market as well as internal references Internal Equity focus Yet best practices indicate focus should be both external & internal 7
Best practices: Salary Scale Wider ranges for each grade; allows for: Growth in the role; Increased complexity, scope; Correct positioning of roles based on market. Target Pay as a main reference point Based on the market; Slope Increase Between all grades; Recognizes the complexity of roles 8
Movement in Salary Ranges Capacity to pay Growth in the role Acquiring additional competencies, skills, qualifications Achieving/exceeding objectives; Greater impact on the institution Unusual market pressure example, retention of hot skills i.e. C.A. s now, IT during Y2K 9
Effective December 1 Now Introduction of Target Pay as main reference point for competitive pay. Based on McGill Competitive market . 2 reference points : Minimum and Maximum; Market reference point not clear Three Zones Min Target Max Zone 1, Zone 2, Zone 3 Single Zone: Min Max Increase in the difference between min & max to provide more movement within each salary range at all levels. Narrow scales- little or no room to move ; pay compression; red circle situations resulting in lump sum payments. Linear slope between pay grades Increasing slope between target pay points to reflect increasing complexity 11
Current Structure $150,000 $140,000 $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 2 3 4 5 6 7 8 9 10 11 Grade 12
New Structure $200,000 $190,000 $180,000 $170,000 $160,000 $150,000 $140,000 $130,000 Zone 2 $120,000 $110,000 Zone 1 $100,000 Min $90,000 Target $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 2 3 4 5 6 7 8 9 10 11 Grade 13
Level Grade Zone 1 Zone 2 Zone 3 Market Median Min Mid Max 1 2 3 4 5 6 7 8 9 10 11 $ $ $ $ $ $ $ $ $ $ $ 34,900 38,400 42,200 46,500 51,100 53,900 60,700 68,300 76,800 86,400 97,200 $ $ $ $ $ $ $ $ $ $ $ 43,600 48,000 52,800 58,100 63,900 71,900 80,900 91,000 102,400 115,200 129,600 $ $ $ $ $ $ $ $ $ $ $ 52,200 57,700 63,400 75,500 83,100 93,500 105,200 118,300 143,400 161,300 181,400 1 $ 47,000 $ 58,000 2 3 $ 78,000 4 $ 110,000 14
Salary Management The range associated with each grade is divided into three zones Target $ $$$ Min Job Max 100% Zone 2 Target (95-110%) Zone 1 Development/Transition Zone 3- Exception Significantly exceeds requirements consistently New incumbents.. Recent promotion Acquiring new skills Meeting most requirements Meets all requirements Sustained achievements Possesses high demand skills Possesses key competencies, both technical and behavioral Recognized as an expert in their field The division of each grade into 3 zones provides increased flexibility and enables the University to place a fair value on the competencies, responsibilities and contribution of each employee 15
Ensure McGills competitive salary positioning on the broader reference market Reinforce the link between contribution and rewards Support employee growth & development Foster accountability/ownership at local managerial level 16
Next Steps Develop competency framework for each job family Technical competencies & behavioral competencies for each role in each job family Review current salary policies and define specific criteria for moving within and between the ranges in new structure Develop specific merit guidelines to support the implementation of the salary policy 17
Salary Freeze in 1995 Catch-up exercise begun in 2001 New M Compensation Structure implemented in 2002 Actual Year 2002 2003 2004 2005 2006 2007 2008 2.2% ???? CPI 2.2% 2.8% 1.8% 2.2% 2.0% Market Avg. Increase* 3.5% to 4% 3.5% to 4% 3.5% 3.5% 3.5% 3.5% 3.5% McGill Budget 5% ** 4.5% 4.5% 4.5% 4.5% 2.5% 3.0% * Source: Conference Board of Canada. Aggregate national & local (Qu bec) data for all industries, as well as public, para-public and not-for-profit organizations. Average increase = overall increase budget, including scale increase, across the board, progressions, merit. ** 2002 included the 2nd and final phases of a catch-up exercise begun in 2001 to compensate for freezes and lower budgets in previous years. Note: The University uses the annual CPI of previous December as a reference when determining salary policy 19
2008: 3% 2% minimum increase for all employees meeting requirements of job 1% additional budget given to each unit to recognize leading performance 2009: 3% 1% minimum increase for all employees meeting requirements of job 2% additional budget given to each unit to recognize leading performance 2010: 3.5% % of minimum increase and performance increase to be defined 20
Performance levels Performance Categories 4 levels LEVEL OF PERFORMANCE MINIMUM INCREASE 2% + Leading 1. Strong 2%-3% 2. Building Consistency 0-2% 3. Immediate Improvement Required 0% 4. 21
Performance Definitions Leading Consistently outstanding performanceexceeds expectations Strong Solid performance and consistently meets job requirements Building Consistency Performance does not consistently meet job requirements Requires Immediate Improvement Performance consistently fails to meet job requirements 22
